Mayor John Hickenlooper on Tuesday contended that economic-development leaders “threw everything you could at them,” but the offer of a free hangar swung the decision to relocate about 300 Frontier Airlines jobs to Milwaukee.

Frontier’s parent company, Republic Airways Holdings, announced Tuesday that about 200 mechanics now based in Denver and some of the 118 employees of the airline’s reservation center in Las Cruces, N.M., will be moved.

Indianapolis-based Republic has been working to consolidate operations since acquiring Frontier on Oct. 1 and Milwaukee-based Midwest Airlines on July 31.

All three cities had been vying to attract the operations and associated jobs.

Republic will be eligible to receive up to $27 million in Milwaukee and Wisconsin tax credits through the end of 2021 based on its promise to keep more than 700 existing jobs and add 800 full-time positions — half of which will involve relocations of Midwest and Frontier workers.

“Can’t pay” their rent

“I think we came up with $16 (million), $17 million (in incentives),” Hickenlooper said. “But we can’t pay the rent for them.” He said it would take $2.5 million to pay the annual bill for the hangar now used by Frontier for heavy maintenance.

Included in the joint Colorado-Denver package were cash incentives, job-training incentives, forgiveness of some of Frontier’s property taxes owed to the city from the airline’s bankruptcy, and offsets for Denver’s 3.62 percent sales tax on parts brought in to repair aircraft.

Republic chief executive Bryan Bedford said in an interview a month ago that Denver’s sales tax and software tax were “prohibitively high.”

Hickenlooper also noted the city has to cut $160 million from its budget, including laying off 176 employees.

Although the city wanted to keep the Frontier jobs, he said “there would be bloodshed in the streets” if the city suffered more cuts while simultaneously offering tax incentives to a business.

“That’s a fair assessment on the part of the mayor,” said Tom Clark, executive vice president of the Metro Denver Economic Development Corp. “Every mayor and governor in the country is facing that as we try to lure new jobs to our cities.”

Successes in the region

Clark said Republic officials were focusing on costs and the cost of occupying buildings.

“We put several options in front of them, but they all had a cost associated with them,” Clark said.

“No matter how good a bargain is, free is free.”

Clark said the region has had recent recruitment successes, adding, “You just have to pick yourself up, dust yourself off and say, ‘That sucks,’ and keep going.”

Gov. Bill Ritter said in a release that the state and city offered a competitive package to keep as many jobs as possible.

Matthew Fazakas, president of Teamsters Local 961, which represents about 275 mechanics, was angered by what he called a failure of Colorado and Denver leaders to step up.

“The jobs are gone,” Fazakas said. “The political leaders of this city and this state don’t care.”

Negative atmosphere?

Airline consultant Mike Boyd of the Evergreen-based Boyd Group put the blame on what he described as a negative business atmosphere in Colorado.

“When Wisconsin, one of the most unfriendly business states . . . can take business from Colorado, that’s nothing to be proud of,” Boyd said.

Republic’s Bedford said the moves, which will be completed by mid-2010, “will help us to further lower the costs of operating our branded business, better positioning us to compete over the long term.”

Denver will remain the site of reservation, marketing, flight-crew and administrative jobs, said Republic spokesman Carlo Bertolini.

“Denver will have the largest employment base of Republic Airways,” Bertolini said. “Denver is a major hub of our network. By no means are we exiting Denver.”

No deadline has been set for relocation decisions. Workers who decide to relocate will receive moving aid.

Those who don’t want to move may apply for open company positions or be eligible for severance.

A customer dining at Washington’s Oceanaire restaurant noticed an unusual line at the bottom of his receipt: “Due to the rising costs of doing business in this location, including costs associated with higher minimum wage rates, a 3% surcharge has been added to your total bill.”